Part 1
Why should a firm use labour-intensive method of production?
a)Labour is cheap
b)Large supply of labour in the country
c)Small size of the firm
d)Consumer’s preference for custom-made products. E.g., shoes
e)Labour is more flexible
f)High cost of capital
Why should a firm use capital-intensive method of production?
a)Price of capital goods is low
b)Price of other factors of production such as labour is expensive
c)Advances in technology
d)The use of capital-intensive technologies reduces human error in the production process.
A tax that takes a larger percentage of income from the rich than from the poor is a _______________ tax.
Progressive
A tax that takes a larger percentage of income from the poor than from the rich is a _______________ tax.
regressive
A tax that takes the same percentage of income from both the rich and the poor is a _______________ tax.
Define Primary sector firms?
A. firms that extract raw materials from the earth. For example, fishing, coal mining
B. firms that provide services to the general public and other firms. For example; doctors, dentists, schools, hairdressers, lawyers, banks, etc.
C. firms that are involved with the processing of raw materials into semi-finished and finished goods – both capital and consumer goods.
A. firms that extract raw materials from the earth. For example, fishing, coal mining
Explain Variable costs.
costs that change with output. Also called “direct costs”. E.g., wages
Define Economic growth.
an increase in a country’s real gross domestic product (GDP) over time.
Explain Fixed costs.
costs which do not change with output in the short run.
What is a direct tax?
tax on income.
What is Horizontal merger?
A. when a firm merges with another firm involved with the production of the same product, but at a different stage of production.
B. the merger of two firms at the same stage of production, producing the same product.
C. the merger of two firms making different products or in different industries.
B. the merger of two firms at the same stage of production, producing the same product.
What is Backward vertical merger?
A. when a firm merges with another firm involved with the production of the same product, but at a different stage of production.
B. when a firm merges with a firm that is the source of its supply of raw materials, components, or the products it sells.
C. the merger of two firms at the same stage of production, producing the same product.
D. when a firm merges with, or takes over, a market outlet.
B. when a firm merges with a firm that is the source of its supply of raw materials, components, or the products it sells.
What is a Competitive market?
A. a group of firms producing the same product.
B. market structure where there is only one supplier or firm of a good or service, with the power to make price.
C. market with many firms that compete with each other.
C. market with many firms that compete with each other.
What is an Industry?
A. a group of firms producing the same product.
B. market structure where there is only one supplier or firm of a good or service, with the power to make price.
C. market with many firms that compete with each other.
A. a group of firms producing the same product.
What is a merger?
when two or more firms join together to form one larger firm.
What is Total cost?
A. total amount that has to be spent on the factors of production used to produce a product.
B. the merger of two firms making different products or in different industries.
C. when two or more firms join together to form one larger firm.
D. costs that change with output. Also called “direct costs”. E.g., wages
A. total amount that has to be spent on the factors of production used to produce a product.
What is Indirect tax?
tax on goods & services. Example: VAT / Sales tax
What is Conglomerate merger?
A. when a firm merges with another firm involved with the production of the same product, but at a different stage of production.
B. when a firm merges with a firm that is the source of its supply of raw materials, components, or the products it sells.
C. the merger of two firms making different products or in different industries.
C. the merger of two firms making different products or in different industries.
What is Tertiary sector firms?
A. firms that are involved with the processing of raw materials into semi-finished and finished goods – both capital and consumer goods.
B. firms that provide services to the general public and other firms. For example; doctors, dentists, schools, hairdressers, lawyers, banks, etc.
C. firms that extract raw materials from the earth. For example, fishing, coal mining
B. firms that provide services to the general public and other firms. For example; doctors, dentists, schools, hairdressers, lawyers, banks, etc.
What is a monopoly?
A. a group of firms producing the same product.
B. market structure where there is only one supplier or firm of a good or service, with the power to make price.
C. market with many firms that compete with each other.
B. market structure where there is only one supplier or firm of a good or service, with the power to make price.
What is Secondary sector firms?
A. firms that extract raw materials from the earth. For example, fishing, coal mining
B. firms that provide services to the general public and other firms. For example; doctors, dentists, schools, hairdressers, lawyers, banks, etc.
C. firms that are involved with the processing of raw materials into semi-finished and finished goods – both capital and consumer goods.
C. firms that are involved with the processing of raw materials into semi-finished and finished goods – both capital and consumer goods.
What is Vertical merger?
A. when a firm merges with another firm involved with the production of the same product, but at a different stage of production.
B. the merger of two firms at the same stage of production, producing the same product.
C. the merger of two firms making different products or in different industries.
A. when a firm merges with another firm involved with the production of the same product, but at a different stage of production.
What is Inflation?
A. total amount that has to be spent on the factors of production used to produce a product.
B. when two or more firms join together to form one larger firm.
C. sustained rise in the general price level in an economy.
C. sustained rise in the general price level in an economy.
What is Economies of scale?
A. advantages, in the form of lower long run average cost (LRAC), of producing on a larger scale.
B. a group of firms producing the same product.
C. an increase in a country’s real gross domestic product (GDP) over time.
A. advantages, in the form of lower long run average cost (LRAC), of producing on a larger scale.
What is Forward vertical merger?
A. when a firm merges with another firm involved with the production of the same product, but at a different stage of production.
B. when a firm merges with a firm that is the source of its supply of raw materials, components, or the products it sells.
C. the merger of two firms at the same stage of production, producing the same product.
D. when a firm merges with, or takes over, a market outlet.
D. when a firm merges with, or takes over, a market outlet.